Under the enhanced certification chief executive officers ("CEOs") and chief financial officers ("CFOs") of companies with year ends as early as June 30, 2008 would have been required to certify, in addition to designing and evaluating the effectiveness of disclosure controls and procedures, that they had designed such internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements.
The new rules no longer require the CEO and the CFO of a venture issuer to certify that they have designed and evaluated the effectiveness of disclosure controls and procedures and internal controls over financial reporting. However, the resulting certificate is to be accompanied by an explanation for investors on how it differs from the full certificate required to be filed by reporting issuers other than venture issuers. Attached is a sample of the new certification required for annual filings by venture issuers.
Even though venture issuers are not required to certify internal control procedures, they are nonetheless advised to voluntarily implement comprehensive internal control procedures for financial and other disclosure for each of the following reasons:
- to facilitate graduation to the Toronto Stock Exchange or becoming a filer subject to United States securities laws;
- to establish a due diligence defence if the issuer or its officers or directors are ever brought to task under the new statutory civil liability regime; and
- for the CEO and CFO to accurately certify that the disclosure documents (i.e. annual and interim financial statements and management’s discussion and analysis) are fairly presented and contain no misrepresentations.
Please contact one of the following securities lawyers at Fraser Milner Casgrain LLP (Vancouver) if you would like further information.
Certification Of Annual Filings
Venture Issuer Basic Certificate
I, name of certifying officer, CEO or CFO [If the certifying officer’s title is not "CEO" or "CFO", indicate in which of these capacities the certifying officer is providing the certificate] of name of issuer certify the following:
- Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including for greater certainty all documents and information that are incorporated by reference in the AIF (together the annual filings) of name of issuer (the issuer) for the financial year ended ‹state the relevant date›.
- No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
- Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
[name of signing officer]
NOTE TO READER
In contrast to the certificate required under Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in MI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of:
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.
Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in MI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.